The Financial Conduct Authority (FCA) is keen to use behavioural economics in the way it regulates. But what does this mean in practice? Laura Miller finds out.
The Financial Conduct Authority (FCA) last week published an ‘occasional’ paper describing how behavioural economics can help it understand and solve problems in retail financial markets more effectively. Behavioural economics uses insights from psychology to explain why people behave the way they do. The crux of the thinking is that people do not always make choices in a rational and calculated way. In fact, most human decision-making uses thought processes that are intuitive and automatic rather than deliberative and controlled. The FCA wants to help consumers overcome these beha...
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